[130315.EN.SEA] Alliances No Use, Only Mergers Will Work as They Did For Airlines: Analyst

"Alliances do not change anything as there are still
the same number of price-setters," Mr Hayes told delegates to Newark's
Journal of Commerce's recent TPM conference in Long Beach.

Mr Hayes said the US airline industry was only able to
improve profitability when it consolidated and reduced the number of price
setters, reported Lloyd's List.

"Without a profit sharing mechanism across the
alliances, there will be temptation to fill your own ships over the ships of
your alliance members," he said.

The industry could improve results if they managed supply
and demand better as Maersk and CMA CGM have done, but
the risk is that alliance members would resort to rate-cutting.

Today's four big global alliances stand to accelerate
disruption of the industry as lines fight for market share in the east-west
trades, thus prompting even more cascading into north-south trades.

But if lines can achieve true consolidation, then the
upside potential is considerable, as the aviation industry has proved on
transatlantic routes where there has been a huge concentration in the number of
airlines, resulting in much better financial performance.